The process which leads up to Budget Day has evolved over the past years.

It used to be a State secret which when about to be unveiled, kept the whole country on tenterhooks and after led to a maelstrom of pro and anti propaganda.

Today the Budget Speech comes at the end of a very open and inclusive public debate which in the last weeks finds its focus in the serried debate within MCESD. This debate, and the publication in mid-summer of the government’s pre-Budget document creates the outer context and framework of the speech.

This year, we had the international recession and its impact on the Maltese economy and the state of Malta’s public finances in the light of the recession and also of the disciplinary action by the Commission because of our higher than expected public deficit.

Now that Minister Tonio Fenech has read the whole two-and-a-half hours Budget Speech, all are able to comment. Even while Mr Fenech was reading the speech, comments came fast and furious over the newsblogs and over the social networks, as opposing teams tried to colour the post-Budget debate.

As soon as the minister finished his speech, comments started to flow in from constituted bodies and other pressure groups while the main parties and the main constituted bodies held late night press conferences to push across their views. On the various TV stations hosts invited key figures in the economic and social debate to have their say, with some flitting from one station to the other.

Ok, when everyone has had his say, what is this year’s budget like? What does it intend to do with the economy? What is the general direction of the country’s economy? Is the country, hence even me, moving in the right direction or not? These questions are much more valid than the usual measurements with which we many times tend to analyse and measure Budget Speeches: what’s in it for me? Having said that, it also goes without saying that if the budget impacts negatively on me, even if it improves life for other people, for me it will still remain a negative budget.

In other terms, one has to analyse the budget first macro-economically but then micro-economically as well.

Malta has not been untouched by the international recession. On the contrary, since it is a small and open economy, the impact of the recession will in the end be huge. If we think we have so far escaped its worst, that may well be because a recession historically is usually late in reaching us, but then it will also be late in leaving us.

Different governments faced different situations and tried different methods. This government has spent money wisely to help those industries at risk to improve their investment and to be able to retain as much of their workforce as possible. It was no system of hand-outs, it was more a system of incentivising investment.

For the coming year, the government has retained these measures, which have protected so many jobs, and wiser with the experience, has polished them and widened them and put them to better use.

To do so, it has sacrificed its committed targets to get to a balanced budget by next year, but there is a national consensus about that. That is also what other, bigger, countries are doing, sometimes begetting a deficit that is far greater than ours – Spain 10.1 per cent, France 8.2 per cent (Malta: 3.79 per cent as the government sees it, 4.5 per cent as the EU sees it).

Besides, many other proposals in yesterday’s Budget Speech also aim at incentivising the creation of jobs and to revitalise the economy: more money for Malta Enterprise, more money for R&D, a biotechnology park, e10m for micro-enterprises as the government comes up with a venture capital fund of its own (seeing no one else seems to be interested in setting it up), more money for tourism, more skills and training facilities (especially the one targeting 15- to 20-year-olds who are out of work and offering the stipends to get trained in skills), more childcare facilities to enable women with small children to get out and work.

At the other end of the scale, there would be people whose eyes get glazed over with all these millions being thrown here and there and who focus almost exclusively on their own personal financial situation.

Over the past years they have seen their buying power getting shaved year after year as the costs of almost everything rose and kept rising and as wages were kept low or at least did not increase by the same amount that the cost of living was rising. This is a statistical fact that has been proved by official statistics, and confirmed by the daily experience of nearly each one of us.

This is the ground that led to the repeated call, from trade unions and the Opposition alike, for a hefty increase by the government, a tax break, or at the very least a decrease or stabilisation of the fuel surcharge which is blamed by most for the decrease in the standard of living over the past year.

On the one hand, the government has rejected tax breaks and the like arguing that any such compensation would result in a spurt of consumer activity which in turn would lead to more money flowing outwards Malta, thus losing the expected impact on the Maltese economy. On the other hand, it has retained the COLA agreement, even in a year when this amounts to e5.82 per week per worker as from 1 January, despite threats by employers this will lead to heavy job losses by many private firms.

The government has also come up with a one-off ‘energy benefit’ to further cushion the expected impact of utility rates.

As announced over the past days, Enemalta has asked for an increase in the utility rates promising, however, that this new rate will be kept for a whole year, whatever the international price of oil.

The situation this year, is thus far better than the way it was tackled last year. In 2008, the Budget Speech (2009) came minus any input on the utility rates, which came later and which were also backdated to October. The COLA increase we are getting next year also reflects the utility rate spike experienced last year.

Just to include other things, yesterday’s Budget Speech also announced more alternative energy investment, while the coming public transport reform should also lead to less use of fuels and a cleaner environment.

Then come the usual budget items such as capital projects, which the reader can find in the appropriate sections in today’s paper. The State will be investing no less than e270 million in education, e1.19 billion on social solidarity and e16 million on waste management.

Doubtless, the discussion will continue, today at workplaces and in shops, on buses and on blogs while political parties and trade unions will keep plugging their respective points of view. People have each their own very personal way of looking at things and the budget impacts on different people in a different way. Objectively, there is much that is commendable in this year’s budget and it will be a very blinkered person to enter the discussion in a negative way and to remain negative even after examining the budget’s proposals.

The fact that according to most people Malta will exit from a negative growth year to a mildly positive one by next year in a way somewhat complicates matters since it will be difficult for people this time next year to say if any improvement came from the general improvements of economies EU-wise or from the good decisions taken in this year’s budget.

Nevertheless, if we measure the impact of this budget from:

1. the job retention or creation there may be;

2. its impact in cutting down the number of people, especially youths, seeking jobs; and

3. its impact in alleviating the cost of living on families and individuals

we may be in a position to roughly gauge its success or failure.

At the end, however, as someone (Alfred Mifsud – below) comments in today’s issue: why wasn’t this budget made last year?